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Hundreds of thousands of people nationally are signing up with state insurers of last resort as home insurers pull back from disaster-prone areas, the Wall Street Journal reported. More than 30 states have some form of last-resort plan for people who can’t get coverage elsewhere. Plans can be statewide or restricted to coastal regions. Coverage varies between states, ranging from all-perils policies to those that cover wind, hail or fire only. The plans were designed to be temporary safety nets. As the private market shrinks, however, the plans are becoming insurers of first, not last, resort in some high-risk areas. In Florida, the Citizens Property Insurance last-resort plan is the biggest home insurer in the state with 1.4 million policies. Florida, California and Louisiana have each seen policyholder numbers for their last-resort plans more than double within the past five years, according to plan representatives, and there’s no sign of a letup. The California Fair Access to Insurance Requirements Plan is piling on policies, adding what a spokesman called a historic 25,000 policyholders in August — more than three times the 7,000 monthly cap on new home policies Farmers Insurance imposed recently in the state.

Rising interest rates are hitting Americans’ finances. Consumers in the market for loans to buy homes and cars are discovering that, because of the Federal Reserve’s rate increases, their money gets them a lot less than it would have a few years ago, the Wall Street Journal reported. Meanwhile, those with credit cards and other loans that carry rates pegged to broader benchmarks are finding they have gotten much more expensive. Fed officials signaled last week that they plan to keep interest rates high for quite a while. For families who don’t need to borrow, higher rates might not affect daily life too much. But for those who do, the Fed’s aggressive rate increases are really beginning to sting. “The bite is starting now,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. Borrowers shopping for mortgages or auto loans are experiencing sticker shock. New 30-year fixed-rate mortgages today carry rates around 7%, up from 3% two years ago. That increase can mean a home buyer has to pay hundreds of dollars more a month compared with two years ago. Rates on car loans have also shot higher. Buying a home or car right now is “completely unaffordable for the typical American household because you’re mixing the higher borrowing costs with the high prices,” said Mark Zandi, chief economist at Moody’s Analytics. He estimates that the typical American household would need to use 42 weeks of income to buy a new car, as of August, up from 33 weeks three years ago. The National Association of Realtors calculates that the typical American family can’t afford to buy a median-priced home.

A new reality has finally started to set in across American households: Higher interest rates are here to stay, according to a Wall Street Journal analysis. The economy has held up relatively well ever since the Federal Reserve started aggressively raising rates early last year. Many households have breathing room because they locked in low rates on their mortgage or car loan before the rate increases started. And in at least one significant way, the high rates can help consumers: Savers can get more bang for their otherwise idle cash. But these higher-for-longer rates are starting to exact a toll on households that need to borrow now, especially for major purchases such as homes and cars. Those who have to rely on credit-card debt, where rates rise along with the market interest rates, are also feeling the bite. In some ways, this tightening is what the Fed wants, because its rate hikes are meant to slow down the economy to curb inflation. The Fed this week signaled it could raise interest rates once more this year. In other words, rates aren’t expected to go down soon. Inflation, for the first time in a long time, is stinging less. This summer, wage gains surpassed inflation for the first time since 2021. Price increases have slowed more than expected, while competition for workers has put pressure on employers to raise pay. Consumers have continued to spend, including on travel, restaurants, clothes and other discretionary purchases. Households have drawn down the glut of extra cash they were able to save early in the pandemic. Still, account balances are elevated compared with 2019 levels.

A federal program that provides critical flood insurance is set to lapse unless renewed by the end of the month, potentially stranding new home buyers in need of coverage, the Wall Street Journal reported. The National Flood Insurance Program provides a safety net for the increasing number of communities that are vulnerable to flooding and might not have access to any other coverage. Now lawmakers are deadlocked over extending the program, which is facing a backlash over a new pricing model intended to make premiums better reflect a home’s risk. “The only thing worse than what we have is nothing,” said Sen. John Kennedy (R-La.), whose bill to extend the program by one year was blocked last week. Congress may find a way to renew the program before it lapses on Oct. 1 or shortly after, as in years past, through legislation that is either separate from or part of the budget fight to prevent a government shutdown. The deadline comes at a critical juncture for the 55-year-old program. The Federal Emergency Management Agency is being sued by 10 states that want to block the program’s revamped pricing, which was intended to help address its decadeslong funding shortfalls and to prevent homeowners in relatively low-risk areas from continuing to subsidize those in flood-prone ones. The new pricing will take several years to be fully implemented and result in rate hikes for two-thirds of the program’s 4.7 million policyholders, according to the Government Accountability Office. The states suing FEMA say the new rates could drive people out of flood zones, slam property values and even lead to people losing their homes because they can no longer afford insurance that is a condition of their mortgages.

The federal government is discharging $37 million in student loans for over 1,200 former students who attended the University of Phoenix, YahooFinance.com reported. The action applies to borrowers who enrolled in Phoenix between Sept. 21, 2012, and Dec. 31, 2014, and applied for a borrower defense loan discharge, a legal ground borrowers can take against a school that engaged in misconduct related to the loan or the educational services it provided. These borrowers will receive emails from the Department of Education by early October and no further action is needed. Any payments already made to the department on related federal student loans will be refunded. Borrowers who attended Phoenix but did not file a borrower's defense discharge will need to complete an application on the Federal Student Aid website. This discharge comes after the department reviewed evidence obtained by the Federal Trade Commission (FTC) in its investigation into Phoenix that resulted in a $191 million settlement in 2019.

The restart of student-loan payments could divert up to $100 billion from Americans’ pockets over the coming year, leaving consumers squeezed and some of the nation’s largest retailers fearing a spending slowdown, the Wall Street Journal reported. Starting Oct. 1, tens of millions of student-loan borrowers will need to make payments averaging between $200 and $300 each month. The payments will mark the first time that borrowers have had to make good on their loans since the Education Department instituted a pause in March 2020. In the interim, they spent the money on televisions, travel, new homes and thousands of other products. That spending is one reason the economy has remained resilient in recent years, despite a surge in interest rates. What the resumption of loan payments means for the broader economy, however, is up for debate, and at least two groups watching closely disagree. Target, Walmart and other retailers that depend on discretionary spending are concerned. Economists, on the other hand, say the renewed payments are a relatively small problem for the more than $18 trillion in annual U.S. consumer spending. Inside Americans’ homes, the debate doesn’t matter. Borrowers say they are curtailing their spending in meaningful ways. Making the payments will add another financial obligation to rising credit-card bills, gasoline prices and other costs, and they say uncomfortable cuts will be necessary.